10/17/95 News Release Adaptec Reports 45th Consecutive Profitable Quarter Revenues Up 40% Over Same Quarter FY95 Milpitas, Calif, - October 17, 1995 - Adaptec® (NASDAQ:ADPT), a leader in input/output technology, today reported record financial results for the second quarter of fiscal 1996, which ended September 29, 1995. Adaptec's second quarter revenues were $149,110,000, a 40% increase over revenues of $106,574,000 reported for the same period last year. During the quarter, the company accounted for the acquisition of three companies: Future Domain, Incat Systems and Trillium Research. After tax charges associated with these acquisitions totaled $32,396,000. Prior to these charges, net income was $32,953,000 or $.61 per share as compared to $18,458,000 or $.35 per share reported for the same period last year. After accounting for the charges, net income was $.01 per share for the second quarter of fiscal 1996. "For over eleven consecutive years, we've turned in one profitable quarter after another," said Grant Saviers, Adaptec's president and chief executive officer. "And in fact, prior to acquisition-related charges, we've completed 14 consecutive quarters of operating profit greater than 20 percent. We're proud of our record of financial consistency and accomplishment." Adaptec's host adapter business contributed strongly to this quarter's revenue growth, reflecting the continued and increasing demand for PCI products, and the positive market impact of new peripherals. Adaptec's storage ASIC business grew significantly in the quarter. Demand in international markets for Adaptec product remained strong. European sales met company expectations, and once again, Japan exceeded plan. The company's Singapore facility now has six surface mount technology production lines operational, enhancing its ability to meet increasing demand. Another competitive advantage achieved during the quarter was receipt of ISO 9001 certification for the design and manufacture of integrated circuits. The recent acquisitions positively position Adaptec for future growth. Incat Systems produces software that allows the writing of data and audio to compact disk recorders. Recordable CD is the next logical development from CD-ROMs. As megabyte-hungry applications and operating systems begin requiring large storage on the desktop, recordable CD will become an increasingly demanded peripheral. In fact, Hewlett-Packard, Pinnacle Micro and a significant number of other companies are currently bundling Incat software with their systems. The need for more robust I/O due to the popularity of PCI systems and multitasking operating systems will also fuel Adaptec growth. Adaptec launched its first UltraSCSI products this quarter, the AHA® -2940 Ultra Wide host adapter, and the AIC® -8325, a high-bandwidth UltraSCSI hard disk controller. UltraSCSI is fully compatible with all previous generations of SCSI peripherals. Quantum, Seagate, IBM, and Hewlett-Packard all support this technology and are developing products to take advantage of it. To help users take advantage of 32-bit operating systems' multitasking and Plug and Play capabilities, Adaptec announced Version 4.0 of its popular Adaptec EZ-SCSI® software. Launched concurrently with Windows® 95, Adaptec EZ-SCSI 4.0 is the first all-in-one SCSI software solution for the new operating system, offering SCSI tape backup, CD-R mastering and duplication software, photo-CD viewer and CD players, and SCSI Explorer, a collection of SCSI system management tools. Adaptec, Inc. Condensed Consolidated Statements of Operations (unaudited) Three Months Ended Six Months Ended Sept. 29, Sept. 30, Sept. 29, Sept. 30, 1995 1994 1995 1994 (In thousands, except per share data) Net revenues $149,110 $106,574 $287,135 $212,635 Cost of revenues 62,659 49,161 119,325 100,334 Gross profit 86,451 57,413 167,810 112,301 Operating expenses Research and development 18,940 14,893 37,167 28,346 Sales and marketing 18,773 13,771 35,850 27,582 General and administrative 7,593 5,619 14,735 11,137 Write off of acquired in-process technology 40,554 -- 40,554 -- 85,860 34,283 128,306 67,065 Income from operations 591 23,130 39,504 45,236 Interest income, net of interest expense 2,659 1,480 5,297 2,831 Income before income taxes 3,250 24,610 44,801 48,067 Provision for income taxes 2,693 6,152 13,081 12,017 Net income $ 557 $ 18,458 $ 31,720 $ 36,050 Net income per share $ 0.01* $ 0.35 $ 0.59* $ 0.67 Weighted average of common and and common equivalent shares outstanding 54,461 53,182 54,201 53,565 ------ ------ ------ ------ * Net income per share impacted by ($0.59) due to one-time acquisition charges. Adaptec, Inc. Condensed Consolidated Balance Sheets Sept. 29, Mar. 31, (In thousands) 1995 * 1995 * ASSETS Current assets Cash and marketable securities $ 269,759 $ 246,746 Accounts receivable, net 83,101 56,495 Inventories 36,599 31,712 Prepaid expenses and other 15,290 15,519 Total current assets 404,749 350,472 Property and equipment, net 72,432 67,863 Other assets 24,944 17,373 $ 502,125 $ 435,708 --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 3,400 $ 3,400 Accounts payable 18,359 22,008 Accrued liabilities 53,694 31,006 Total current liabilities 75,453 56,414 Long-term debt, net of current portion 5,950 7,650 Shareholders' equity Common stock 163,364 140,191 Retained earnings 257,358 231,453 Total shareholders' equity 420,722 371,644 $ 502,125 $ 435,708 * Amounts at September 29, 1995 are unaudited. Amounts at March 31, 1995 are derived from audited annual financial statements. Adaptec, Inc. (NASDAQ: ADPT) designs, manufactures and markets IOware® solutions to eliminate performance bottlenecks between microcomputers, networks, and peripherals. Solutions range from simple connectivity products for single-user and small office desktops, to intelligent subsystem, high performance SCSI, RAID and ATM products for enterprise-wide computing and networked environments. Adaptec I/O solutions are incorporated into the products of virtually all the major computer and peripheral manufacturers around the world. Founded in 1981, and headquartered in Milpitas, Calif., Adaptec is a recognized market leader in high performance I/O technology. Adaptec currently employs approximately 2,000 people, and with its global distribution network, serves customers worldwide. Adaptec's World Wide Web home page address is http://www.adaptec.com. Adaptec, AHA, AIC, EZ-SCSI, and IOware are trademarks of Adaptec, Inc., which may be registered in some jurisdictions.